Tribunal Orders Liquidation due to Lack of Resolution Plan

The Tribunal ordered liquidation of the corporate debtor as no resolution plan was received within the 180-day Corporate Insolvency Resolution Process (CIRP) period, and the required approval percentage for liquidation was lacking. The Resolution Professional (RP) faced challenges in completing the information memorandum, leading to liquidation. The RP was replaced by a new Insolvency Professional as Liquidator, emphasizing compliance with the Insolvency and Bankruptcy Code and Liquidation Process Regulations. Strict adherence to regulatory provisions, cooperation with the Liquidator, and publication of public announcements were mandated for compliance.

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Issues:
1. Ratification of expenses incurred by the Interim Resolution Professional during the Corporate Insolvency Resolution Process (CIRP).
2. Seeking liquidation of the corporate debtor pursuant to Section 33(1) of the Code.
3. Replacement of the Resolution Professional.
4. Failure to submit necessary information hindering the completion of the information memorandum.
5. Appointment of a new Insolvency Professional as Liquidator.
6. Compliance with the provisions of Chapter III of the Code and Liquidation Process Regulations, 2016.

Issue 1: Ratification of Expenses:
The Resolution Professional (RP) filed an application seeking ratification of expenses incurred during the CIRP of the Corporate Debtor. The RP detailed the initiation of CIRP, constitution of the Committee of Creditors (COC), and subsequent events leading to the decision for liquidation. The COC decided on liquidation, and the RP proposed his fee for ratification. The Tribunal noted the expiration of the 180-day CIRP period and the lack of required approval percentage for liquidation by the COC. However, as no resolution plan was received, the Tribunal ordered liquidation in accordance with Section 33(1)(a) of the Code.

Issue 2: Replacement of Resolution Professional:
The RP faced challenges in completing the information memorandum due to the unavailability of necessary financial documents. Despite efforts to obtain information through legal proceedings, the RP could not proceed with the memorandum. Consequently, the Tribunal ordered the liquidation of the corporate debtor. Furthermore, the RP failed to submit the required written consent to act as Liquidator, leading to the replacement of the RP with a new Insolvency Professional as Liquidator.

Issue 3: Appointment of New Insolvency Professional as Liquidator:
Following the replacement of the RP, the Tribunal directed the appointment of a new Insolvency Professional as Liquidator. The Board proposed a name from a panel of IPs for the liquidation process. Shri Kuljeet Singh was appointed as the Liquidator for the corporate debtor. The Tribunal emphasized strict compliance with Chapter III of the Code and the Liquidation Process Regulations, 2016, outlining various directions related to legal proceedings, discharge of officers, and cooperation with the Liquidator.

Issue 4: Compliance with Regulations:
The Tribunal highlighted the importance of complying with the provisions of Chapter III of the Code and the Liquidation Process Regulations, 2016. Directions included restrictions on legal proceedings against the corporate debtor, transfer of powers to the Liquidator, and cooperation with the Liquidator by the personnel of the corporate debtor. The Liquidator was instructed to publish a public announcement, file reports, and ensure compliance with regulatory requirements.

This comprehensive summary covers the detailed analysis of the judgment, addressing each issue involved in the legal matter.

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